FARMERS’ RIGHTS

Dominion, Volume 27, Issue 15, 12 October 1933, Page 11

FARMERS’ RIGHTS

Sale of Milk and Cream

APPEAL FOR RULING Regulation Challenged INTERESTS OF INDUSTRY The hearing of the application to have declared ultra vires Section 55 of the Dairy Regulations, 1933, issued by Order-in-Council under the Dairy Industry Act, 1908, was resumed in the Api>eal Court yesterday. The effect of the regulation in question is to forbid the transfer of the supply of cream or milk from one dairy factory to another during one season, and it was contended tliat such a regulation was an unwarranted invasion of the right of ap-. pellants to dispose of their cream to the best advantage. Against this it was submitted that individual rights must be subordinated to the interests of the dairy industry as a whole.

On the bench were the Chief Justice (Sir Michael Myers), Mr. Justice Reed, Mr. Justice MacGregor, Mr. Justice Ostler, and Mr. Justice Smith. The plaintiffs were John Charles Carroll and William James Keeley, farmers, Te Aro, for whom Mr, G. P. Findlay, with him Mr. L. P. Leary, both of Auckland, appeared. Mr. A. Fair, K.C., Solicitor-General, was for the AttorneyGeneral.

It had been stated that by complying with the regulation the plaintiffs were suffering serious financial loss. The question had been removed from the Supreme Court for argument as to whether the regulation was not wholly void as being in excess of powers conferred upon the Governor-in-Council by the Act. The Crown’s submission was that the regulation was framed to prevent suppliers threatening to change from one factory to another in order to induce the graders to give their produce a higher grading. Power Not Contemplated. Mr. Findlay, continuing his argument, submitted that the court must regard the legislation anxiously and scrupulously to see if the power exercised was within the purview of the Legislature in passing the legislation. Nothing in the Dairy Industry Act could justify any regulation of the general character of the one in question, and he submitted that it was therefore ultra vires and void.

Mr. Leary referred to the original Act of 1898, which was, be said, framed to regulate the inspection of dairies, manufacture, inspection and sale of dairy produce; shortly, it was an Act for the regulation and sale of dairy produce. That, however, could not affect questions of free disposal. It. imposed standards on dairy produce, but the farmer could sell to whom he pleased, and the Act contained nothing which suggested interference with the right to contract. It was far from being within the scope of the Act that there should be any negation of that freedom, yet the regulation was to all practical purposes one compelling them during the season to supply their milk to a particular quarter. Mr. Fair, replying to the arguments for the plaintiffs, said he had to protest against the suggestions that the regulations were unwarranted. Throughout there had been the implication that for some obscure purpose the department had tried to infringe upon private rights. There was, not a shred of ground for such suggestions. The Department of Agriculture was a great department of State, and its sole purpose was to serve Parliament and the Dominion, as it had done faithfully for many years, and the reputation of the Dairy Division stood high from one end of the Dominion to the other. The regulation was enacted in the interests of the greatest industry in the Dominion. Plaintiffs’ argument had ignored the fact that the industry employed 80,000 people, and was responsible last year for pearly half the exports of the Dominion of all kinds. Nearly all dairy farmers delivered their produce is the co-operative companies, which were in the nature of partnerships among the farmers, and the regulation was that when a farmer had commenced to supply one of these farmer partnerships ho should continue to do so for the rest of the season.

No ‘Ticking the Boat.”

The industry was organised on a basis that was peculiar to itself, proceeded counsel. The co-operative companies did not attempt to make profits for themselves, simply taking milk from the farmer. The industry was dealt with as a whole, and no individual farmer could say that the produce sold In London was his produce, but it was the Joint produce of the whole of the farmers. The regulation prevented an individual farmer from doing what be might call “rocking the boat.” If the company got Into difficulties a farmer could not withdraw and leave his fel-low-farmers to bear the loss. The Chief Justice remarked that the regulation did seriously interfere with the farmer’s right to dispose of his produce. Counsel agreed, but said the dairy industry was a great national industry subject to special supervision and control, and the power was Intended to be given for the welfare of the Industry to be safeguarded. Hundreds of farmers had expressed their satisfaction with the regulations. Mr. Finlay remarked that they were mainly concerned in the National Dairy Association, but the attitude of the farmers In the district concerned in this actlou was one of definite hostility, and they had not complained because they immediately determined to assail the regulations. Mr. Fair agreed that there were 50 or CO suppliers in Mr. Finlay’s district who were dissatisfied, but he suggested that, having made a bad bargain, they wanted to leave the ship in distress. The Chief Justice: We are concerned only with the question of law. To my mind it is a simple question of law here. Is the regulation justified by the provisions of the Statute? Mr. Fair proceeded that during Mr. Finlay’s argument there had been no recognition of the fact that one of the main purposes of the Dairy Industry Act was the welfare of the industry, and particularly the export industry, which necessarily involved the production of the Industry as a whole. The export and manufacturing businesseswere not separated. The 1926 Act conferred power to interfere with the private rights of the dairy factories by compelling them to pay higher prices for the higher graded cream and milk. Questions for Court. The questions to be decided by the court, counsel submitted, were (1) a question of fact; eould the Governor-in-Council have honestly arrived at the decision that juch a regulation was necessary for the efficient administration of section

23 of the 1908 Act and section 7 of the 1926 Act? (2) A question of mixed law and fact, whether the. regulation could be considered as required by the Act? (3) A question of construction, whether the regulation was within the powers conferred by section 23 of the 1908 Act in conjunction with section 7 of the 1926 Act. Mr. Justice Ostler: If the answer to No. 3 is “No,” there is no need to answer the other questions at all.

Counsel submitted that the answers ip, each case should be “Yes.” He admitted that a case like Carroll’s appeared at first sight to be one of hardship. Grading was not the cause of his wish to transfer, but the position had to be looked at from the standing of tli£ general application of any exception. Persons dissatisfied with the grading would easily find some apparently valid reason for transferring. Persons transferring from a co-opera-tive factory that, had not made good contracts were throwing the burden on their farmer partners, and were fair weather sailors. They desired when a storm came along to move on to a fair-weather voyage, leaving the farmer who bad no other convenient factory to carry the burden. 'The Chief Justice: There is the one question of law; is the regulation warranted by the Act?

Mr. Fair submitted that the answer to the question should be “Yes.” Mr. Fair continued that suppliers could always obtain information as to the way things were going with the company. The first effect of the regulation was to raise the standard of grading by two methods, first to raise the standard of grading of milk and cream, and consequently cheese and butter, by freeing the graders, company managers and the companies from the temptation to approach other companies’ customers by adopting a lower standard of grading. It was the evil in the industry which required remedying. (2) It freed the graders of the company from the pressure brought to bear on them by suppliers who threatened to change to another company so that they could then get a better or higher grading. The position was that the grader’s salary often depended on the produce received in his particular factory. Even the manager’s salary sometimes depended on that.

The whole of part one of the Dairy Industry Act, said counsel, was designed to interfere with individual freedom, subordinating the interests of the individual to those of the industry. anil the effect of the regulation was the same.

Some argument took place as Io whether the Act could have been contemplated so as to apply to the grading of milk and cheese, when in fact such grading did not exist when the Act was passed.

Mr. Fair submitted that the question at Issue was covered, as the Act dealt with the product right from the cow to the ship and therefore must refer to the product right through. Mr. Finlay had just opened his final remarks when the Court adjourned until this morning.